NEW PALM GARDENS, INC. vs. ALCOHOLIC BEVERAGES CONTROL COMMISSION.

DREBEN, J. After the Alcoholic Beverages Control Commission (commission) suspended for eight days the plaintiff's license to sell alcoholic beverages, the plaintiff sought judicial review of the commission's decision under G. L. c. 30A, Section 14. Both parties moved for judgment on the pleadings [Note 1] and the commission's motion was allowed. Judgment was entered in the Superior Court dismissing the complaint. A stay of the suspension was granted by a single justice of this court.

The suspension of the plaintiff's license was based on a determination by the commission that the plaintiff had violated a regulation of the commission by permitting obscene

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dancing on the premises in violation of G. L. c. 272, Section 29. [Note 2] The regulation, 204 Code Mass. Regs. Section 2.05(2) (1978), [Note 3] also referred to by the parties as Regulation 21, prohibits a licensee from permitting any "illegality of any kind to take place" on the licensed premises.

The plaintiff challenges the decision of the commission on numerous grounds, including that: 1) the decision was made upon unlawful procedure (G. L. c. 30A, Section 14[7][d]) because the notice of hearing and the decision itself cited the wrong statute; 2) in the absence of a criminal conviction, the commission does not have the authority to determine whether a licensee has violated a criminal statute and, in any event, such a determination must be made upon a standard of proof beyond a reasonable doubt; 3) the proper standards in determining obscenity were not applied by the commission; 4) actual knowledge of the obscenity by the licensee was not shown; and 5) the commission failed to state its reasons as required by G. L. c. 30A, Section 11(8). We reject all of the plaintiff's claims and affirm the judgment as modified by this opinion.

1. References to the wrong statute by the commission. Both in its original notice of hearing dated July 24, 1979, and in its decision dated September 26, 1979, the commission referred to a violation of G. L. c. 272, Section 32, [Note 4] instead of to a violation of G. L. c. 272, Section 29. We think the errors insignificant.

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The licensee was well aware of the charges made against it and concedes in its brief that it availed itself of the opportunity to review the commission's file prior to the hearing. Moreover, as found by the commission in its statement of reasons, when offered a continuance, the licensee chose to go forward. Reversal of agency action is only appropriate under G. L. c. 30A, Section 14(7)(d), where "the substantial rights of any party may have been prejudiced." Aristocratic Restaurant of Mass., Inc. v. Alcoholic Beverages Control Commn. (No. 1), 374 Mass. 547, 551, appeal dismissed, 439 U.S. 803 (1978). No such showing of prejudice, let alone substantial prejudice, has been made here by reason of the incorrect statutory citation in the notice of hearing.

Similarly, the reference to G. L. c. 272, Section 32, in the commission's decision, where the commission in its statement of reasons had correctly referred to G. L. c. 272, Section 29, was clearly inadvertent and nonprejudicial. A corrected notice of decision was properly issued prior to the hearing in the Superior Court.

2. Determination by the commission of an "illegality" in the absence of a criminal conviction. The licensee claims that whether a criminal statute has been violated can only be determined by the judiciary. This argument misconceives the purpose of G. L. c. 138. That statutory scheme which gives the commission the authority to grant, revoke and suspend licenses was "enacted . . . to serve the public need and . . . to protect the common good." G. L. c. 138, Section 23, as amended through St. 1977, c. 929, Section 7. "[T]he purpose of discipline is not retribution but the protection of the public." Arthurs v. Board of Registration in Medicine, 383 Mass. 299, 317 (1981). The commission is given "comprehensive powers of supervision over licensees," Connolly v. Alcoholic Beverages Control Commn., 334 Mass. 613, 617 (1956), as well as broad authority to issue regulations. It could rationally conclude that a violation of G. L. c. 272, Section 29, is an "illegality" which relates to the "proper and orderly conduct of the licensed business" (G. L. c. 138, Section 24)

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requiring suspension. See G. L. c. 138, Sections 23, fifth paragraph, and 64. [Note 5] See Saxon Coffee Shop, Inc. v. Boston Licensing Bd., 380 Mass. 919, 928 (1980); Olitsky v. O'Malley, 597 F.2d 295, 302 (1st Cir. 1979); cf. Aristocratic Restaurant of Mass., Inc. v. Alcoholic Beverages Control Commn. (No. 1), 374 Mass. at 554; California v. LaRue, 409 U.S. 109, 115-116 (1972); Paris Adult Theatre I v. Slaton, 413 U.S. 49, 58 n.8 (1973). Thus the commission can properly determine whether a licensee has violated G. L. c. 272, Section 29, for purposes of license suspension under G. L. c. 138, regardless of the existence or outcome of any criminal proceedings. See Arthurs v. Board of Registration in Medicine, 383 Mass. at 317. We see no such usurpation of the judicial function as is urged by the licensee.

Moreover, we note that both the Supreme Judicial Court and this court have upheld suspensions or revocations of licenses on findings by licensing authorities of violations of criminal statutes. Olde Towne Liquor Store, Inc. v. Alcoholic Beverages Control Commn., 372 Mass. 152, 153 (1977). Aristocratic Restaurant of Mass., Inc. v. Alcoholic Beverages Control Commn. (No. 2), 374 Mass. 564, 565, appeal dismissed, 439 U.S. 803 (1978). United Food Corp. v. Alcoholic Beverages Control Commn., 375 Mass. 238, 240 (1978). Boylston-Washington, Inc. v. Alcoholic Beverages Control Commn., 8 Mass. App. Ct. 396 (1979).

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See Saxon Coffee Shop, Inc. v. Boston Licensing Bd., 380 Mass. at 928.

We reject, for similar reasons, the licensee's claim that the commission's determination must be upon a standard of proof beyond a reasonable doubt in these civil proceedings. General Laws c. 138, Section 64, see note 5, supra, specifically authorizes suspension upon "satisfactory proof" of a violation. The statutory standard of review of agency action is whether the agency action is supported by "substantial evidence," G. L. c. 30A, Section 14(7)(e), as defined in Section 1(6), [Note 6] and that standard has been consistently applied in cases where revocation or suspension of a license has been grounded on the violation of a statute or regulation. Olde Towne Liquor Store, Inc. v. Alcoholic Beverages Control Commn., 372 Mass. at 153. Aristocratic Restaurant of Mass., Inc. v. Alcoholic Beverages Control Commn. (No. 1), 374 Mass. at 552. United Food Corp. v. Alcoholic Beverages Control Commn., 375 Mass. at 244. Boylston-Washington, Inc. v. Alcoholic Beverages Control Commn., 8 Mass. App. Ct. at 398. See Saxon Coffee Shop, Inc. v. Boston Licensing Bd., 380 Mass. at 930.

The licensee also contends that because free expression interests under the First Amendment to the Federal Constitution or under art. 16 of the Massachusetts Declaration of Rights may be implicated, see McKinney v. Alabama, 424 U.S. 669, 683-684 (1976) (Brennan, J., concurring), a finding of obscenity should be made by the commission only on proof beyond a reasonable doubt. No other authority has been cited to us for this proposition, and we are not persuaded that deviation from the statutory standard is mandated by art. 16. [Note 7]

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We note, moreover, that the decision of the trier of fact, the commission, is by no means "unreviewable," Commonwealth v. Plank, 378 Mass. 465, 469 (1979), and that, in the area of obscenity, reviewing courts ensure "the necessary sensitivity to freedom of expression," Freedman v. Maryland, 380 U.S. 51, 58 (1965), by conducting their own independent review where necessary to protect constitutional rights. Commonwealth v. Plank, 378 Mass. at 469. Jenkins v. Georgia, 418 U.S. 153, 160-161 (1974). Smith v. United States, 431 U.S. 291, 305-306 (1977). See Miller v. California, 413 U.S. 15, 25 (1973).

3. Licensee's challenges to the finding of obscenity. The commission, after a hearing at which three witnesses testified (Inspector Fox of the commission, Loris D'Amato, the manager of the licensee, and the manager's husband, Vincent D'Amato), found the licensee guilty of "violation of ABCC Regulation 21 -- to wit Chapter 272, Section 29." Its subsidiary findings are contained in its "Statement of Reasons" which, except for two short introductory paragraphs, is set forth in full in the margin. [Note 8]

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3(a). The licensee first argues that since the inspector did not see the entire performance of either of the two dancers, but only a portion of each, the commission could not and did not consider the works "taken as a whole" as required by statute [Note 9] and case law, e.g., Roth v. United States, 354 U.S. 476, 489 (1957). The uncontroverted evidence before the commission indicates that the inspector watched the first dancer for a half an hour, that he saw the second performer engage in a series of acts of sexual conduct before leaving,

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that at that time a record had ended and a second record, a "slow" one, was being sought. At the time the first record had ended, the dancer had pulled about two inches of a twelve inch handkerchief from her vagina. What would be the continuation of the dance could readily be inferred. The inspector's description to the commission was sufficiently complete to give the full flavor of the performance and the commission could properly conclude that the likelihood that the unseen portions had "serious literary, artistic, political or scientific value" was remote. See Kois v. Wisconsin, 408 U.S. 229, 231 (1972) ("A quotation from Voltaire in the flyleaf of a book will not constitutionally redeem an otherwise obscene publication").

3(b). Prior to the hearing of evidence, counsel for the licensee asked the commission, "[S]tate, if you could, what the community standards of Massachusetts are." One of the commissioners replied, "[Y]ou just can't do those kinds of standards, in a vacuum" without hearing evidence. The licensee claims that because the commissioners were unable to answer what the community standards were, they were unable to determine Statewide standards and, therefore, that the licensee was entitled, under the authority of Commonwealth v. Trainor, 374 Mass. 796, 800 (1978), and Commonwealth v. Mascolo, 7 Mass. App. Ct. 275, 279-280 (1979), to a finding that the matter was not obscene.

"[C]ontemporary community standards take on meaning only when they are considered with reference to the underlying questions of fact that must be resolved in an obscenity case." Smith v. United States, 431 U.S. at 300. After hearing the evidence, the commissioners did not determine that no Statewide standards existed or suggest that the commission could not agree as to what those standards were. See Commonwealth v. Mascolo, 7 Mass. App. Ct. at 280. They did not deny knowledge of community standards, but, to the contrary, indicated that they had heard similar cases in numerous communities of the Commonwealth. Although they invited evidence of such standards from the licensee, they did not, as claimed, place the

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burden of showing community tolerance of the performance on the licensee. The commissioners made clear at the hearing that, in determining what the Statewide standards were, they would "rely upon our own experience and judgment." Such reliance is appropriate. See District Attorney for the No. Dist. v. Three Way Theatres Corp., 371 Mass. 391, 394 (1976) ("trier of fact may draw on his own knowledge of normative views in his own community in applying statutorily prescribed community standards").

The request for articulation of community standards was improper and no inference of lack of knowledge may be drawn from an inability to answer. As stated in Smith v. United States, 431 U.S. at 308, "A request for the jurors' description of their understanding of community standards would have been no more appropriate than a request for a description of the meaning of `reasonableness.'"

In sum, the record does not support the licensee's claim that the commission lacked knowledge of community standards.

3(c). The licensee also urges that the commission's failure to find specifically that the three-pronged test [Note 10] of obscenity was met vitiates its decision. It would, of course, have been far preferable for the commission to make subsidiary findings in terms of the statutory definition, and "to state [its] reasons for progressing from subsidiary facts to the ultimate decision." Saxon Coffee Shop, Inc. v. Boston Licensing Bd., 380 Mass. at 929. However, from the commission's findings, we think "[i]t is plain" that the dance performances were "a form of hard-core pornography well within the types of permissibly proscribed depictions described in Miller." Hamling v. United States, 418 U.S. 87, 115 (1974). (Miller v. California, 413 U.S. at 25, cites "lewd exhibition of the genitals" as one of its "plain examples".) The description of the dance "can and does speak for itself." Paris Adult Theatre I v. Slaton, 413 U.S. at 56 n.6, quoting from United States v. Wild, 422 F.2d 34, 36 (2d Cir. 1969), cert. denied, 402 U.S. 986 (1971). We have no

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"real doubt" that the commission upon a remand would again reach the same conclusion, "and accordingly that remand would be merely a waste of time." United Food Corp. v. Alcoholic Beverages Control Commn., 375 Mass. at 245.

Our examination of the transcript finds substantial evidence for the commission's description of what occurred. The dances included "lewd exhibitions of the genitals" and other acts of sexual conduct as defined in G. L. c. 272, Section 31. [Note 11] See note 8, supra. Whether such acts were depicted in a "patently offensive" way, with reference to contemporary standards, was a question for the fact finder. See Commonwealth v. Kocinski, ante 120, 122-123 (1981), where on very similar facts, convictions under G. L. c. 272, Section 29, were upheld. See also Seattle v. Marshall, 83 Wash. 2d 665, 666-667, cert. denied, 419 U.S. 1023 (1974). In this case, we cannot say that the acts complained of did not "warrant a finding that an average citizen of Massachusetts today would be repelled." Contrast Commonwealth v. Plank, 378 Mass. at 470.

Other claims of the licensee challenging the finding of obscenity may be readily rejected. The Commonwealth was not "obliged to present expert testimony concerning the absence of serious literary, artistic, political or scientific value in the allegedly obscene matter . . . . We have no doubt of the [trier of fact's] ability to appraise the value of such performances" without additional testimony. Commonwealth v. Kocinski, supra at 124-125. See Paris Adult Theatre I v. Slaton, 413 U.S. at 56 n.6. We do not concur

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with the claim that the dances occurred in an area affording "privacy" within the meaning of Commonwealth v. Scagliotti, 373 Mass. 626, 628 (1977), or that the presence of an audience of consenting adults prohibits the finding of a violation of G. L. c. 262, Section 29. Commonwealth v. Kocinski, supra at 123 n.5.

4. Knowledge of obscenity by the licensee. The commission made no subsidiary finding as to the knowledge of the licensee, and the only finding on this subject is the conclusory one quoted in the penultimate paragraph of n.8, namely: "We find that these acts were performed over a substantial period of time on the night in question, and that the person in charge of the licensed premises, at the time, permitted the performance to go on."

Before discussing the inadequacy of the commission's findings and reasons for its conclusion, see part 5, infra, and before discussing the evidence before the commission as to the licensee's knowledge or constructive knowledge, we point out that an examination of the transcript makes it clear that the reference to "the person in charge of the licensed premises, at the time" was a reference to Vincent D'Amato (Vincent).

Both D'Amatos testified. D'Amato's wife (Loris) was the manager of the premises, and held this position for a year. After January, 1979, when she had had a baby, her duties became mainly bookkeeping. Vincent testified that he had started working full time at the club about three months before. When asked his position, he answered, "I set forth the rules for the patrons and the employees." From this and other testimony, it became evident during the course of the hearing that, as put by one of the commissioners, "this gentleman" had been "running" New Palm Gardens since the commencement of his full-time employment.

The commission's finding must also be read in connection with G. L. c. 138, Section 26, as amended by St. 1935, c. 440, Section 24. That statute requires every corporation licensed to sell alcoholic beverages to appoint a manager to whom must be delegated "full authority and control of the premises."

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Loris held that position. However, the commission recognized that, despite his wife's nominal title, Vincent was "in charge of the licensed premises" at the time of the violation.

We turn next to the evidence before the commission on Vincent's knowledge or constructive knowledge that obscene dances took place. Inspector Fox testified that on the night he visited the club he did not see either D'Amato there. Both of them also acknowledged that Vincent had not been in the bar between 9:00 and 10:30, as they had held a party upstairs in their apartment for Vincent's father.

Vincent testified to the ambiance of the dance setting and the propensities of the dancers. The stage used in July, 1979, at the time of the performances, had been built by Vincent. It was eight feet by eight feet and had a border of eleven inches designed as a resting place for patrons' drinks. Patrons sat around the stage, and Inspector Fox testified that he had been, at times, less than two feet away from the dancers. The stage was subsequently rebuilt to prevent patron-dancer touching. Vincent indicated that he issued oral instructions to the dancers not to touch the customers, not to put anything in their vaginal or anal areas, and to get dressed before sitting with customers. When asked why he limited the dancers, he said, "[I]n speaking to other owners, they told me not to let them, they would do anything on the stage, stuff bottles up themselves, they'll do all kinds of weird things to themselves, they'll actually pull a patron on the stage if you let them." He also related, "[T]hey all tell me the same thing, that if you let them do it, if you let the dancers, they'll do anything and the patrons love it."

There was thus before the commission uncontradicted evidence that dances took place within arm's reach of customers, that the stage was designed with a border for resting drinks, that the person in charge of the premises knew that the dancers, if unsupervised, would "do anything," and that, indeed, for at least one half-hour of one dance and for considerable portions of another, dancers openly performed dances which included sexual conduct.

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We think that this evidence was sufficient to support a finding that Vincent should have known that the dancers, if unsupervised, would be likely to engage in sexual acts with customers or would otherwise violate G. L. c. 272, Section 29, and that "on the basis of all the surrounding facts and circumstances" he "was subject to an affirmative duty" to provide some supervision over the dancers. See Commonwealth v. Rosenberg, 379 Mass. 334, 342-343 (1979). It could be found that he authorized performances "with at least some degree of lack of care." Olde Towne Liquor Store, Inc. v. Alcoholic Beverages Control Commn., 372 Mass. at 154. In sum, even if it cannot be inferred from the openness and length of the performances that Vincent condoned the dancers' behavior, compare Boylston-Washington, Inc. v. Alcoholic Beverages Control Commn., 8 Mass. App. Ct. at 399, Commonwealth v. Bucaulis, 6 Mass. App. Ct. 59, 63, cert. denied sub nom. Bucuvalas v. Massachusetts, 439 U.S. 827 (1978), we think that there are sufficient factors here to find that he "permitted" the violation. [Note 12] We consider the language in Commonwealth v. Rosenberg, 379 Mass. at 341, relating to the possible duty of the manager of an adult bookstore (see also People v. Adler, 25 Cal. App. 3d 24, 37 [Super. Ct. 1972], vacated on other grounds, 413 U.S. 912 [1972]; People v. Tannahill, 38 Ill. App. 3d 767, 772-773 [1976]), and Commonwealth v. Kocinski, supra at 124, relating to active management of a business involved in adult entertainment, supportive of our conclusion. We also note that there is substantial authority elsewhere which would construe similar language to require even less evidence of knowledge than is present in this case. Clown's Den, Inc. v. Canjar, 33 Colo. App. 212, 215 (1974). G & B of Jacksonville v. State, 371 So. 2d 138, 139 (Fla. App. 1979). Reeb v. Liquor Control Bd., 24 Wash. App. 349, 353 (1979). Am-Chi Restaurant, Inc. v. Simonson, 396 F.2d 686, 687 (D.C. Cir. 1968).

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5. Failure of commission to state its reasons. A troublesome aspect of this case is the commission's failure to make adequate findings and to state its reasons. We have already referred to this failure in part 3, supra. Particularly dismal is the lack of findings with respect to knowledge or constructive knowledge of the licensee and the omission of the criteria used in determining that the person in charge (whom we regard to be Vincent D'Amato, see part 4, supra) "permitted" the performance to go on.

Although we recognize the arguments in favor of remand, we nevertheless conclude that sending the matter back to the commission would be fruitless, as "there is no real doubt" that the commission would again order suspension couched in the legal standards we have now articulated. United Food Corp. v. Alcoholic Beverages Control Commn., 375 Mass. at 245. See Katz v. Massachusetts Commn. Against Discrimination, 365 Mass. 357, 363 (1974). Unlike School Comm. of Chicopee v. Massachusetts Commn. Against Discrimination, 361 Mass. 352, 354-355 (1972), where remand was required, there is here no conflicting evidence which the agency has to assess. The evidence on constructive knowledge was uncontroverted. Also, unlike Hamilton v. Department of Pub. Util., 346 Mass. 130, 137-138 (1963), or New York Cent. R.R. v. Department of Pub. Util., 347 Mass. 586, 593 (1964), where remand was also required, the findings to be made do not involve any expertise of the agency. We have already set forth the legal test to be applied. Applying that test, the commission would undoubtedly find that Vincent D'Amato had reason to know that the dancers, if left unsupervised, would engage in obscene performances. Accordingly, despite the unfortunate lacunae in the commission's statement of reasons, we remand the action to the Superior Court with directions to modify the judgment so as to affirm the decision of the commission. See Duato v. Commissioner of Pub. Welfare, 359 Mass. 635, 641 (1971). As so modified, the judgment is affirmed.

So ordered.